Change in social cost of carbon under scrutiny

Critics in Congress are turning up the heat on the Obama administration’s decision to quietly push through a regulatory change that makes it easier to justify the costs of new greenhouse gas rules.

A House Oversight and Government Reform subcommittee will grill White House regulatory overseer Howard Shelanski about the change at a hearing Thursday. Meanwhile, Reps. Duncan Hunter (R-Calif.) and Nick Rahall (D-W.Va.) are looking for co-sponsors for a bill that would require changes to cost-benefit calculations to be done in the open.

Text Size

-

+

reset

The debate concerns the social cost of carbon, or SCC, a measure of the cost imposed on society by each metric ton of greenhouse gas pollution — and a crucial number for weighing the benefits of climate regulations. The administration significantly boosted the cost estimates in May, a month before President Barack Obama unveiled a climate strategy that will rely heavily on greenhouse gas rules for power plants.

The administration revealed the change in the quietest way possible, outlining the new cost estimate on Page 409 of Appendix 16A of a technical support document for an Energy Department regulation on microwave ovens. A working group that included officials from the DOE, the Environmental Protection Agency and the Office of Management and Budget said the higher estimates stem from changes in the way it models the costs of global warming, including impacts on sea-level rise and agriculture.

“Connecting the dots, it’s clear the administration updated the social cost of carbon without much notice in order to justify sprawling new regulations,” Hunter told POLITICO. He added, “There must be a more transparent process, allowing the public and industry to weigh in on something so significant.”

The bill would require that any regulatory impact analysis not be finalized until it has been available to the public for 60 days, during which the public can comment. It specifically singles out the social cost of carbon.

OMB says there was nothing secretive about the way the cost estimates were developed and that it issued the changes in the microwave oven regulation “because these values became available during interagency review of the final rule.” That matches the principle of “utilizing the best available information to inform the rule-making process,” office spokeswoman Ari Isaacman Astles said.

After the agencies released their initial carbon cost estimates in February 2010, “technical experts from numerous agencies met on a regular basis to consider public comments, explore the technical literature in relevant fields and discuss key model inputs and assumptions,” Astles added. “The updated values released in May 2013 apply the same methods and assumptions … as in 2010.”

“It also is important to note that the only changes made to the SCC estimates reflect the refinements made to the underlying climate models,” she said.

A May administration report says the updates are “based on the latest peer-reviewed version of the models, replacing model versions that were developed up to 10 years ago in a rapidly evolving field.” Other parts of the estimates were not revisited, the report says.

GOP members of the Senate Environment and Public Works Committee are also unhappy about the change and complained last week that the panel’s Democrats were planning a climate hearing without calling administration officials to answer questions on the social cost estimates. Several senators asked the EPA, DOE and OMB for more details about the cost change last month.

“Some observers have expressed concern that the new SCC values could be used to justify tighter standards while others have criticized the methods for understating the SCC,” the Congressional Research Service said in a recent memo to Hunter after reviewing his proposed legislation. “Congress may wish to consider the process by which the SCC have been developed, the role of public and congressional input and how the SCC may affect future actions.”

The service noted that the estimates aren’t likely to be the final word for decisions about carbon regulations because cost-benefit analyses are not typically the determining factor in regulatory choices. Nevertheless, CRS said, “The 9th Circuit Court ruled in 2007 that estimating the benefits of rules without including such values for climate damages is ‘arbitrary and capricious.’”

Even some supporters of the EPA’s greenhouse gas regulations are up in arms about the change. Liberal transparency advocates say crucial changes done without public input could easily go the other way in a different administration.

The last time the Obama administration calculated values of the social cost of carbon was in 2010. That similarly came tucked in the back of a technical document — Appendix 15A of a DOE regulation on energy efficiency standards for small motors, the Center for Progressive Reform’s Frank Ackerman said.

“In the bigger picture, what’s missing is any defense of policymaking by anonymous task forces,” Ackerman said in a recent blog post. “Once upon a time, democracy was thought to include requirements of public notice of major decisions, sometimes followed by 90-day comment periods, and even agency responses to public comments. But that was so 20th-century.”

As for the defense that at least the “anonymous task force” is acting where Congress has failed, Ackerman said: “George Orwell wrote novels about this approach to government; they don’t end well.”